Increases highway fund via fuel tax

Section 1 amends Section 142 of the National Internal Revenue Code, as amended, governing the specific tax on manufactured oils and other fuels.
Section 2 amends Section 145 of the National Internal Revenue Code, as amended, governing the specific tax on diesel fuel oil.
Section 5 allocates the proceeds of the additional municipal tax to road and bridge funds and creates a special refund situation for specific users.
The tax changes in Sections 1 and 2 are the basis for the dedicated Highway Special Fund proceeds under Section 3.

Section 3 directs that the proceeds of the increased taxes accruing to the Highway Special Fund are set aside for highway and bridge financing and liquidation.
Section 3 limits use of those increased proceeds to:
- amortizing loans or bonds for construction, reconstruction, or improvement of highways (including bridges), and
- liquidating toll bridges constructed from revolving funds authorized under Act No. 3500, as amended.
Section 3 requires that such liquidation is recommended by the Secretary of Public Works and Communications and approved by the President.
Section 3 ties disbursement timing and authorization to that recommendation-and-approval process.

Section 1 imposes specific taxes on refined and manufactured mineral oils and motor fuels, per liter of volume capacity:
- Kerosene or petroleum: 2.5 centavos
- Lubricating oils: 7 centavos
- Naptha, gasoline, and all other similar products of distillation: 8 centavos
Section 1 imposes specific tax on denatured alcohol to be used for motive power at 1 centavo per liter of volume capacity.
Section 1 provides an alcohol-mixing rule: if denatured alcohol is mixed with gasoline on which the specific tax has already been paid, only the alcohol content is subject to the tax prescribed.
Section 1 treats denatured alcohol removal for motive power as follows: removal of denatured alcohol of not less than 180 degrees proof (90% absolute alcohol) is deemed removal for motive power unless shown to the contrary.
Section 2 imposes a specific tax on diesel fuel oil and similar fuel oils “having more or more the same generating power,” at PHP 1 per metric ton.

Section 1 authorizes a 50% refund of the specific tax paid when any of the listed oils are used in agriculture and aviation during the five years from June 18, 1952.
Section 1 requires the refund to be claimed by submitting:
- (1) a sworn affidavit of the producer and two disinterested persons proving actual use in agriculture, or an alternative for producers associations/federations;
- (2) if the producer belongs to a producers association or federation duly registered with the Securities and Exchange Commission, a sworn affidavit of the president attesting actual use in agriculture; and
- (3) for aviation oils, a sworn certificate satisfactory to the Collector of Internal Revenue proving actual use in aviation.
Section 1 limits aviation refunds by denying refunds for aviation oils used by citizens and corporations of foreign countries that do not grant equivalent refunds or exemptions to similar Philippine-used aviation oils by citizens and corporations of the Philippines.
Section 5 creates an additional refund for another use case: when oils are used by miners or forest concessionaires, 25% of the specific tax paid shall be refunded by the Collector of Internal Revenue upon proof of actual use and under similar conditions enumerated in Section 1(1) and Section 1(2).

Section 3 requires that the proceeds of the increased taxes under Sections 142 and 145 be set aside exclusively for:
- amortizing loans or bonds authorized for construction, reconstruction, or improvement of highways including bridges, and
- liquidating toll bridges constructed from revolving funds authorized under Act No. 3500, as amended.
Section 3 limits toll bridge liquidation to cases where liquidation is recommended by the Secretary of Public Works and Communications and approved by the President.
Section 3 uses the increased tax proceeds as the funding source for the above highway and bridge purposes without diversion to other uses.

Section 4 authorizes municipal boards or councils to levy an additional tax of not exceeding 25% of the rates fixed under Sections 142 and 145 on manufactured oils sold or distributed within city/municipal limits.
Section 4 expressly permits the municipal levy notwithstanding the provisions of Sections 142 and 145 as amended by Republic Act No. 1435.
Section 4 ratifies and validates municipal taxes previously levied by cities through city ordinances on gasoline, airplane fuel, lubricating oil and other fuels.
Section 4 directs that the method of collecting the additional municipal tax shall be prescribed by the municipal board or council concerned.

Section 5 provides that proceeds of the additional tax on manufactured oils accrue to the road and bridge funds of the political subdivision for whose benefit the tax is collected.
Section 5 repeats the 25% refund rule for oils used by miners or forest concessionaires, requiring proof of actual use and using similar conditions enumerated in Section 1(1) and Section 1(2).
Section 5 restricts highway construction: no new road shall be constructed unless the routes or location are approved by the Commissioner of Public Highways after a determination that the road can be made part of an integral and articulated route in the Philippine Highway System.
Section 5 ties that approval requirement to Section 26 of the Philippine Highway Act of 1953.